In general, vehicle consumers either choose ownership or leasing upon deciding to acquire a vehicle. Ownership means that legal title in the vehicle is transferred to the vehicle consumer. Ownership may appeal to consumers that value owning a vehicle and/or intend on using the vehicle for a relatively long period of time, for example, five to seven years. Other vehicle consumers are drawn to leasing because of relatively low monthly payments and the opportunity to return the leased vehicle after a relatively short period of time, usually two to three years, and enter into another leasing arrangement for a new vehicle. This opportunity appeals to vehicle consumers that enjoy driving a new vehicle every two to three years, for example. In either situation, ownership or lease, consumers often finance acquisition of the vehicle.
Commonly, vehicle acquisition is financed by a vehicle finance company. Under one typical vehicle acquisition plan, the vehicle consumer purchases a vehicle from a vehicle dealer and enters into a retail installment contract (otherwise referred to as a RIC) with the vehicle dealer. The RIC is a contract which evidences the purchase of the vehicle on credit over time. The vehicle dealer then assigns the RIC to the vehicle finance company in exchange for the outstanding balance due on the RIC. The vehicle finance company collects a periodic payment, usually monthly, from the vehicle consumer.
Under a typical leasing arrangement, the vehicle manufacturer sells a vehicle to the vehicle dealer. The vehicle dealer usually transfers possession of a leased vehicle to the consumer after execution of a lease agreement and payment of a down payment, a first month lease payment and applicable taxes. The vehicle dealer then sells the vehicle and assigns the lease to the vehicle finance company. In return, the vehicle finance company typically delivers the purchase price to the vehicle dealer.
Although each financing arrangement has certain advantages as described above, typical ownership and leasing plans present disadvantages for vehicle consumers and vehicle financing companies. RICs afford vehicle ownership to vehicle consumers at the cost of higher monthly payments relative to leasing. Leasing usually offers relatively low monthly payments relative to ownership, but does not afford ownership. In addition, vehicle finance companies are required to file cumbersome reports with state and local jurisdictions on vehicles leased since they own the vehicles as physical assets. Moreover, many vehicle financing companies maintain separate business operations for ownership and leasing programs. Since many of the functions carried out by the two business operation are duplicative, finance companies experience business inefficiencies.
In light of the foregoing, there exists a need to provide a method and system for financing vehicle acquisition as with the sale via an RIC with relatively low payments as with a lease. There also exists a need to provide a method and system which shifts legal title to the vehicle consumer, thereby lessening the burden on vehicle finance companies to file cumbersome reports typical of leasing arrangements. Moreover, a method and system is needed that can allow vehicle finance companies to at least partially fold together their leasing business operation into their ownership business operation by transferring legal title as a comparable alternative to a typical leasing arrangement. There also exists a need for providing a method and system for financing acquisition of tangible personal property with at least some of the attributes mentioned above.